On March 27 2025, BOC Research Institute released the Economic and Financial Outlook for 2025Q2 (hereinafter referred to as the “Report”) in Beijing. The Report reviews the economic and financial operations both globally and in China as well as the operations of the global banking industry in 2025Q1. It also provides an outlook on the economic and financial situations and the trends of the global banking industry in 2025Q2.
In terms of global economic and financial situations, the Report notes in 2025Q1, the world economy was characterised by a simultaneous weakening of aggregate supply and aggregate demand. The manufacturing sector continued to improve, while service sector sentiment declined; consumption growth slowed down and private investment was sluggish; the risk of global inflation rebound was rising; fiscal and monetary policy stances of major economies were diverging; global FDI remained subdued, debt levels were rising, and commodity price volatility was increasing. In 2025Q2, the downside risks to the global economy have increased, and the simultaneous downturn in aggregate demand and aggregate supply is likely to continue. The risk of an inflationary rebound in some economies is rising; Trump's tariff policy may trigger a new round of global ‘trade war’; The pace of fiscal expansion in Europe is expected to accelerate, and the pace of interest rate cuts by the Federal Reserve will be more cautious; global FDI will continue to grow at a low rate, and the dollar index will oscillates at a high level; global debt growth will slow down, oil prices will continue to be under pressure, and the upward trend of gold prices will continue.
In terms of China’s economic and financial situations, the Report notes, since 2025, China's economy has generally maintained its recovery momentum since the fourth quarter of last year. Domestic macro policies have become more proactive and effective, with both existing and incremental measures continuing to take effect, driving a rebound in domestic demand and gradual improvements in market expectation. It's projected that GDP growth in the first quarter will be around 5.2% year-on-year. In 2025Q2, domestic macro policies will be significantly stepped up, driving a stronger contribution of domestic demand to economic growth, while structural imbalances in market supply and demand are expected to ease. The integration of technological and industrial innovation will accelerate. External headwinds may further intensify, with export facing pressure. It is projected that the year-on-year growth rate of GDP in 2025Q2 will approximate 5.3%. It is recommended to expedite the implementation of promulgated policies, enhance policy synergy, and persistently drive the recovery of domestic demand and the improvement of expectations while actively addressing external challenges. Strengthening policy communication and expectation guidance will invigorate the vitality of market entities.
In terms of global banking situations, the Report notes, since 2025, the global banking industry has faced significant uncertainty in its operating environment. Particularly following Donald Trump's return to the U.S. presidency, a series of policies on tariffs, industry, climate, and financial regulation have been introduced, leading to major adjustments in the global banking landscape. Overall, the pace of scale expansion has remained stable, profitability may see a short-term rebound, credit asset quality in key industries has deteriorated, and capital adequacy ratios have shown slight fluctuations. In contrast, China’s banking sector continues to experience an improving operating environment. The Government Work Report has laid out the annual work plan, consolidating the foundation for economic recovery and growth. The banking sector will align with key economic priorities, continuously enhancing the quality and efficiency of services to the real economy. Asset scale will continue to grow, profitability will stabilize, and asset quality will remain sound, ensuring the high-quality completion of the 14th Five-Year Plan and laying a solid foundation for the successful launch of the 15th Five-Year Plan.
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